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The biggest mover in the FTSE 250 today (11 September) is Trainline (LSE:TRN). The stock rocketed 12% higher when the market opened. Although it has steadied since then, it’s still firmly in the black for the day. The FTSE 250 stock gave a trading update, which is the main catalyst for the move. Yet I noticed something in the report that has made me think this move could keep going.
A solid financial update
The business delivered a strong first half (the period ending in August), showing a 2% rise in total revenue while net ticket sales increased by 8% year on year. These figures reflected growth in leisure and fewer disruptions from UK rail strikes.
Given the performance, the company has pushed its profit outlook to the upper end of its previous guidance. Specifically, it expects its adjusted core profit growth to land near the top of its forecast range of 6%-9% for the full year. In addition, the management team announced a £150m share buyback programme to be executed over the next year.
Based on the higher guidance and resolute earnings, I can see why the stock got a positive bounce after it was released to the market.
Expansion abroad
What caught my eye wasn’t the UK operations, but rather what’s going on in France. The CEO commented that “rail liberalisation in Europe continues to demonstrate the value Trainline brings as the preeminent domestic aggregator, most recently in Southeast France where increased carrier competition between Paris, Lyon and Marseille has driven Q2 sales growth of 34%.”
This is really interesting and could offer a significant revenue boost going forward. The trading update spoke about how it’s actively focused on investing in marketing in France and expanding services further in the region.
At the moment, international ticket sales are about a third of UK sales. So although it’s not the main market, it’s big enough to make a difference. If this area can continue to get traction over the coming year, it can help to more than offset a stagnant UK market.
Ultimately, I think this could make the stock a much more attractive option for UK investors. Previously, I think some might have been put off due to the outlook for the UK market.
Concerns remain
The stock is down 13% over the last year, showing that sentiment around the company isn’t strong. One factor is the regulatory environment. There’s concern around a potential new public railway retail platform from the government, which could erode its market share and margins.
Even with this, the growth abroad is impressive. With the potential for France to help drive the business in the long term, I think it’s a stock for investors to consider.
